Transport Committee on Sept. 24th, 2018

[Robert Aubin, NDP, Trois-Rivières, QC]

No problem.

[Andy Gibbons]

It depends on what you value most. I wouldn't use the term “more advanced”. I'd simply point out that in this region, the economic reality is that an American airport boasts of two million Canadians flying from that facility, and the reason for that is not that American carriers are any better than us at delivering those services. There's an economic equation that we believe should be addressed.

We have a user-pay model in Canada. In the United States, they invest more public funds into aviation infrastructure, and there are lots of pros and cons on each side. We're saying that if we want to continue to build in this region, we need to take a very close look at that gap and work to shrink it as much as possible.

I don't know if that answers your question.

[Robert Aubin, NDP, Trois-Rivières, QC]

Yes, thank you.

In Quebec, the airports at Trois-Rivières and Sherbrooke would like to become regional airports at the very least, which would allow business people to quickly transit to the largest Canadian centres and possibly to other countries. However, at airports like that, security measures are always a problem. They are allowed to acquire the necessary resources to solve the problem, but only if the municipality in question pays for it. However, this is almost unthinkable for municipalities. In addition, it would increase the cost of plane tickets and make those airports less competitive.

Do you have any idea how the security-related costs could be distributed? Should those fees be charged to passengers across Canada, or should they be charged by airport?

[Andy Gibbons]

That's a very good question. There are a few different parts there.

With respect to security funding, we have always advocated that the money collected from the air travellers security charge be directly allocated to screening services at Canada's airports. That doesn't currently happen. That money does go to other places. The vast majority does go to screening. I don't want to give the wrong impression, but there is an element that does not. We have requested that it be directly tied, given that it is the user-pay model.

On the issue of cost recovery for CATSA services, there were two elements in Bill C-49. One allowed larger airports to top up, and the other allowed smaller airports to basically purchase those services. Until we fix the element that I discussed first, we don't like that trend line. If there are services the government provides to other sectors that are from the public purse, the trend line of cost recovery is a concerning one, and it should be particularly concerning when it comes to regional travel.

Your third part was about regional travel in Quebec. That's been challenging for us. We recently announced that we were ceasing service between Montreal and Quebec City. That is not typical for our company. Typically, when we launch regional service, the fares come down up to 50% and the overall market stimulates up to 70%. That has been true in most of the country. It was not true for that route. We also discontinued another one. The expansion there did not go so well. We never want to do that, but it is a very challenging market for our company.

[Robert Aubin, NDP, Trois-Rivières, QC]

Thank you.

My next question is for Ms. Puckering.

I think I have understood the three suggestions you made in your opening remarks.

First, you propose that we invest in adequate transportation infrastructure. I guess your suggestions were in order of importance. What do you mean by adequate transportation infrastructure? Are we talking about upgrading the infrastructure you already have, or are we talking about new infrastructure that needs to be put in place?

[Cathie Puckering]

To address the question, the investment of infrastructure would be holistic within the intermodal opportunities as well as the airport infrastructure directly. I am here today representing the John C. Munro Hamilton International Airport. Given the future growth opportunities that we have and how intensive investment is in airports, it's very difficult for an airport our size to enable the movement of goods and people with a 24-7 facility while trying to keep the costs low and not pass those costs off to the individuals and the users who are paying for that service. The spinoff effect of the number of jobs that are created and the economic impacts that come from the movement of goods and the movement of people are revenue streams that are not seen at the airport. Tapping in and understanding the potential that we may have for the region itself with accommodating the growth that we're going to see is an opportunity that the region, and Ontario and Canada, cannot afford to pass up. We will be constrained at the airport in facilitating all of that investment while keeping costs low.

The other piece is the highway connections. I did mention that the mid-pen is keeping the people moving quickly and keeping those goods moving quickly around the airport and in the region and the innovation corridors to satisfy what we're seeing today for growth and what's planned for the future.

[The Chair, Liberal, Judy Sgro]

Thank you.

Go ahead, Mr. Hardie.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Thank you, Madam Chair.

Andy, are you saying that the Buffalo airport is getting government subsidy?

[Andy Gibbons]

They have said that they get government subsidy, yes.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Okay, that's what you just told us.

[Andy Gibbons]

Yes.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

There you are. You said it.

All right.

Obviously, it costs money to operate all of the facilities that go into supporting an airport, and there's always a choice. It's user-pay or everybody-pay. Where's the balance?

[Andy Gibbons]

The answer to your question would be that it depends, in this region specifically, on how many Ontarians are we okay with using that airport as opposed to using—

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

—how many Ontarians are content to pay more in something else to basically offset these costs.

I'm not challenging this. I'm not suggesting that you get your beggar's bowl out. I think what would really be necessary is to do a more fulsome overview of the economic impact, the ripple effect or the multiplier effect of what the airport provides, in terms of both the actual value of services and the social and environmental aspects. You're not just looking for a reduction in fees, etc., but you're also looking for greater investments in supporting infrastructure and everything else. I think you can make a case, if the net benefit or value is there.

To do that, we might need to know a bit more about.... I asked one of the earlier witnesses whether they had done an origin and designation study of the truck traffic coming in and out of the particular region. The same goes for you. Where is this going? Is your airport, in fact, geographically positioned to be the most efficient, or are there other efficiencies that can be driven out of that system as well? That goes beyond your cost structure and everything else, but, again, looking at it holistically, what is the greatest benefit to the region and to all of Canada?

In metro Vancouver, where I'm from, the airport there, YVR, has been extremely aggressive, investing in rapid transit, for instance, to get people to and from the airport without having to drive. They've opened up quite a large outlet mall because they have the land available to do that. Are these the sort of things that are in the cards or on the radar for Hamilton?

[Cathie Puckering]

Public transit, getting to and from the airport, is definitely on our priority list. The Hamilton airport is actually owned by the City of Hamilton and under private management by the Tradeport International Corporation. We once had an ownership with the Vancouver Port Authority, so a lot of our processes in place today actually come from there.

It's no secret that airports generate a lot of non-aeronautical revenue from commercial activity. Commercial activity does increase as passengers grow the airport and you're able to provide more opportunity for retail and concession-based revenue opportunities.

Once those economies of scale happen with the passenger, we're able to reduce fees and charges overall that may be aeronautical and based to the airlines. That's one of the successes of the low-cost model that's evident in Europe today. The airlines choose airports with the understanding that the airports will realize potential from that revenue stream and keep those fees and charges low. Until we get to that level, it's a bit of a challenge, but there are opportunities thanks to Swoop, Norwegian—which will be adding service in March 2019 to the UK—and Flair, which have been providing services in our marketplace for almost 24 months now. They've stimulated a new market for people who have chosen to travel and never could before, or they're doing it more often, so our passenger numbers for next year are looking to be around a million. That's up from 300,000 in 2016.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Okay, that's fine. Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you.

The floor is yours, Mr. Iacono.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Thank you, Madam Chair.

I'll be sharing some of my time with my colleague Vance.

You enthusiastically shared that more and more Canadian airports have the capacity to handle a larger share of Canada's international trade. They're playing a more instrumental role in transportation of domestic and foreign goods, but all of this at what cost? Do you know why I ask this?

[Andy Gibbons]

I will be honest—I'm not following completely. Sorry.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

That's great. That's what I expected.

What are your thoughts about air noise, night flights and day flights, for the Canadian population and the health hazards this causes to many Canadians at the expense of developing this commercial expansion?

[Andy Gibbons]

Was your question specifically with respect to noise and the health effects of increased capacity and increased flights?

It's a very good question. I'm not close to that in my role in terms of noise and noise management. I know there has been a lot of work, and the minister and his predecessor in the previous government have really challenged Canada's airports to be more in tune with those challenges.

One of the big answers, of course, is the purchase of the most fuel-efficient, modern, quiet aircraft. When you look at our Boeing 737 MAX aircraft, or even a Boeing 737-800, versus a 600 or a 200 or something, it really does make a major difference. We're talking about a 10%, 20% or 30% decrease, both in terms of emissions and in terms of noise.

We find that to be the single best way to address it—to invest—and that requires us to be profitable and entrepreneurial. So there is that, but I can't offer too many more comments about noise protocols. We do participate at an industry association level with some of these, but I'm happy to get more information about that for you.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

I just wanted to see if you were aware of it.

They say there are smart cities; there are smart ports. Is there anything with smart air or smart flights? Is there anything of that nature going on, air intelligence?

[Andy Gibbons]

There are a couple of things for us. Just last week, we were the first Canadian airline to launch an artificial intelligence bot on Facebook Messenger. That's in real time. If we want to discuss passenger rights, that's an element of the innovation investment we do.

A lot of that is consumer-facing. If you want to interact—you don't know where your gate is, or you have a problem with your connection or your flight is delayed—what do we owe you, or what would you like? That's the sort of investment we're making.

I can't really talk about the operational side. It's not my area, but innovation and investment in artificial intelligence are. If you fly WestJet to Ottawa next week, you will read in our magazine that our CEO has said we will be a technology company that flies airplanes, mostly benefiting the consumer.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Thank you.

I will share the rest of my time with Vance and Ken.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Angelo and Madam Chair.

I want to dive a bit deeper into the technology, especially with e-commerce coming on board.

My first question is this. With respect to integrating a distribution logistics system in a multimodal fashion, what kind of discussions are you having with other methods of transportation? For example, in your case it would be the Hamilton Port Authority, or it could be CN or CP rail and/or roadway networks, trucking companies and things of that nature. I ask both of you because, obviously, we have a provider here as well as the asset itself.

What kind of discussions and/or strategies are you putting in place to actually accomplish that multimodal network and then in turn the integration of the logistics and distribution system?